New committee to target senior investment challenges, fraud

by Penelope Graham06 Jun 2016

SHARE

New committee to target senior investment challenges, fraud

Seniors are among the most vulnerable of investors – and a new advisory panel is being assembled in Ontario to assess how to better protect their assets and interests. After nearly a decade of lobbying by the Small Investor Protection Association, the Ontario Securities Commission is seeking members for its newly established Seniors Expert Committee to advise on issues facing older investors.

“The Seniors Expert Advisory Committee will give the OSC access to a multidisciplinary team of experts on issues related to older investors, providing us with valuable input on our seniors strategy, an important initiative for the OSC,” said Maureen Jensen, Chair and CEO of the OSC. “The committee builds on our ongoing efforts to better understand the unique needs of older investors.”
SIPA member Ken Kivenko says the need for such a committee is long overdue, as there are a number of sophisticated exploitation methods targeting the elderly.

“We saw the need because there were a lot of reports coming in about diminished capacity,” he says. “It’s not just dementia – it’s lots of things: energy levels, being alone, widows and widowers – they’re often isolated or in a retirement home – they’re easily more vulnerable – they don’t have anybody to consult with.”

“In addition, they are the target, because that’s where the money is – there’s a disproportionate amount of money with retirees.”

He says for many older investors, transitioning from a growth account to a de-accumulating one such as a RIFF can be challenging. “It takes a whole new level of knowledge; you almost have to become a pension guy,” he says. “How am I going to let this last as long as this person is expected to live? You have to change your risk profile, you have to change the risk tolerance, you have to have tools for simulating the account.”

“Fees become tremendously important. If the fees are too high, the money will disappear very fast, and there’s no new money coming in,” he says.

“We’ve heard a lot complaints from people who’ve been told they need to go into a fee-based account when they get older, because if you’ve got a million bucks and they’re going to move you into a fee-based account at 1.5% - well instead of a thousand paid in fees, it becomes $15,000 for a fee.”

“That kind of exploitation, it’s elegant. There’s no rule against it, so nobody gets sanctioned, there’s no penalty, but these people are losing $15,000 per year for fees.”

I agree with Mr. Kivenko's comment - and I feel that it is going to become essential that there be a mass education drive to get communities aware of what standards of business practice are essential - and need to be demanded at all levels.

I am proposing an education drive to get everyone in Canada familiar with the Covenant on Economic, Social and Cultural Rights. This is something that Parliament ratified in 1976. It upholds the principle of economic self-determination. If this Covenant were to be fully acculturated in Canada, it would become clear immediately that schemes to de-regulate investment dealers, and to allow "self-regulation" - something billed as "getting the industry to police itself", is an ironic falsity. Instead what the de-regulated industry tribunals are doing rather than policing the industry, is saying "we're keeping this file closed." Despite evidence of 1) brokerages being convicted to failing to supervise their offices - and then thinking it is perfectly OK to brush off losses including legal fees of $78,000 to a client who was able to fully document his grievance. 2) Our largest national broker pretending to have GICs and then putting the client's funds in volatile seg funds. This ostensibly prestigious dealer then proceeded to lie about the quality of the client's memory - denying that he ever contracted for GICs. When this client went to BC Supreme Court, he was able to get disclosure of the contract. Instead of the "regulators" wanting to insure that good faith be honoured, there policy as "we will keep this file closed."